Negative Gearing, CGT and SMSF Property Changes 2026

What Should Property Investors Do Now?

Before the new rules commence, consider taking the following steps:

• confirm whether each investment property qualifies for grandfathering
• obtain valuation evidence before 1 July 2027 where appropriate
• keep detailed records of acquisition costs, renovations and capital improvements
• review whether your current ownership structure remains suitable
• review any SMSF residential borrowing arrangements before the commencement deadline
• complete trust resolutions and year-end tax planning before EOFY

Many of these actions are easier, and potentially less costly, to complete before the legislation begins to apply.

How Is Negative Gearing Changing?

The reforms do not remove negative gearing altogether. Instead, they change how certain future rental losses may be used for tax purposes.

From 1 July 2027, losses arising from certain established residential investment properties acquired after the relevant commencement date will generally no longer be available to offset salary and other non-property income.

Those losses may instead be carried forward and applied against future eligible property income or capital gains.

What Is Changing for Capital Gains Tax?

From 1 July 2027, many individuals, trusts and partnerships will move from relying on the current 50% CGT discount to a system that uses:

• inflation indexation of the cost base; and
• a 30% minimum tax on certain post-1 July 2027 gains where applicable.

Transitional rules are expected to apply to assets already owned before 1 July 2027. As a result, appreciation that accrued before the commencement date may be subject to a different calculation methodology from appreciation arising after that date.

This means investors may need to establish the value of affected assets at key points in time to support future capital gains tax calculations.

This makes accurate valuations and record-keeping increasingly important.

Property investors should retain:

• valuation reports
• renovation invoices
• acquisition costs
• capital improvement records
• supporting documentation.

Can My SMSF Still Borrow to Buy Residential Property?

Only if the borrowing arrangement qualifies for grandfathering.

SMSFs will generally no longer be able to establish new limited recourse borrowing arrangements (LRBAs) for any properties that’s not ‘business real property’, such as residential properties, mixed use properties or primary production land, after 10 August 2026.

What Should SMSF Trustees Do Now?

Trustees who are currently considering a residential property acquisition through an SMSF should seek advice on whether all legal, lending and compliance requirements can be satisfied before the relevant commencement date.

Relying solely on preliminary discussions, indicative finance terms or lender pre-approval may not be sufficient to access any available transitional arrangements.

Should I Buy Property Through a Company, Trust, SMSF or Personally?

The recent reforms mean there is no single structure that suits everyone.

The right ownership structure depends on factors including:

• taxation
• financing
• land tax
• asset protection
• succession planning
• estate planning
• investment goals.

Companies continue to pay tax at 30% and may provide future franking credit opportunities. While companies do not receive the traditional 50% CGT discount, the new rules may change how they compare with trusts and individuals in some situations.

An SMSF may still offer valuable retirement planning benefits, although future residential borrowing opportunities will become more limited.

Rather than relying on historical assumptions, investors should review their ownership structure before their next acquisition.

Why Structure Planning Matters More Than Ever?

Choosing the wrong ownership structure can affect:

• capital gains tax
• land tax
• asset protection
• borrowing capacity
• estate planning
• succession planning
• long-term after-tax wealth creation.

A structure review before purchasing a property could save significant tax over the life of an investment.

Frequently Asked Questions

Are the negative gearing changes now law?

Yes. The negative gearing reforms are now law. The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 received Royal Assent and was registered on 26 June 2026, confirming the new property tax measures and their implementation timetable.

Will existing investment properties still qualify for negative gearing?

In most cases, yes. Investment properties acquired before the relevant Budget announcement are generally expected to retain their grandfathered status, meaning they can continue to access the existing negative gearing rules until the property is sold, subject to the legislation.

What happens if I buy an established investment property after the changes?

If you purchase an established residential investment property that falls under the new rules, from 1 July 2027 rental losses will generally no longer be available to offset your salary or other employment income in the same financial year. Instead, those losses will typically be carried forward and applied against future investment income or capital gains, where permitted.

What is capital gains tax (CGT) indexation?

Capital gains tax (CGT) indexation is a new method of calculating taxable capital gains. Rather than taxing the full nominal gain, the rules adjust an asset’s cost base to reflect inflation before the capital gain is calculated, subject to the requirements of the legislation.

Can my SMSF still borrow to purchase residential property?

Potentially. Whether a self-managed super fund (SMSF) can continue using a limited recourse borrowing arrangement (LRBA) for residential property depends on when the arrangement was established and whether it satisfies the transitional or grandfathering provisions under the new legislation.

Is a company the best structure for property investment?

Not always. There is no single ownership structure that is suitable for every investor. The most effective structure depends on a range of factors, including your tax position, financing strategy, investment objectives, asset protection requirements, and long-term wealth planning. A professional review can help determine which structure best aligns with your circumstances.

Speak to a Property Tax Specialist

Australia’s property tax landscape is changing rapidly.

If you:

• own investment properties;
• invest through an SMSF or trust;
• are planning your next purchase; or
• want to review your ownership structure,

now is the time to seek advice.